Market Review - 24/09/2013 22:13GMT
The single currency weakened against the greenback on Tuesday after German sentiment data came in slightly below expectations, and comments from ECB officials saying they were prepared to do more to keep interest rates low.
Although the single currency traded sideways in Asia, and rose briefly to session high at 1.3519 in early European morning, the euro retreated after the release of weaker-than-expected German business climate and dropped to an intra-day low at 1.3464 after comments from ECB's Coeure. However, the euro pared intra-day losses and rebounded to 1.3497 in the New York morning before stabilising.
Germany Ifo business climate (Sep) came in at 107.7, versus the forecast of 108.0, previous reading is revised to 107.6
ECB's Coeure said 'ECB is committed to make sure liquidity will remain ample; LTRO is part of ECB's instruments.'
Versus the Japanese yen, the greenback rose to session high at 99.18 in European morning after comments from Fed's Dudley yesterday increased speculation that the Federal Reserve could still taper its bond purchases this year. However, the dollar met renewed selling there and dropped sharply to an intra-day low at 94.48 intheNew York morning only to climb back to 99.01 later in the day due to renewed cross-selling of yen.
The British pound remained under pressure in Asia. It dropped sharply in early European morning after the release of weaker-than-expected U.K. mortgage approvals. The price eventually fell to an intra-day low at 1.5955 at New York open. However, cable pared intra-day losses and rebounded to 1.6016 in New York morning.
U.K. BBA mortgage approvals (Aug) came in at 38.2K, vs the forecast of 39.0K, and previous reading is revised to 37.4K.
In other news, the BoE's Miles said that the degree of slack in the U.K economy means that monetary policy won't quickly return to normal, and the market sees unemployment reaching the 7% threshold more quickly than he considers likely. He also noted that the idea that guidance has backfired because of better data is "Alice in wonderland, upside down logic", and he is more confident about the path to recovery than at any time since he joined MPC in 2009.
On the data front, the U.S. consumer confidence (Sep) came in at 79.7, worse than the forecast of 80.0, previous reading is revised to 81.8. U.S. Redbook retail sales came in at -0.4% m/m n 3.6% y/y.
Data to be released on Wednesday:
New Zealand trade balance, exports and import, Japan machine tool orders, Swiss consumption indicator, France business climate, Italy consumer confidence, U.K. CBI distributive trades, U.S. durable goods, and new home sales on Wednesday.